Teaching Children About Money

By David Chazin

With school back in session, kids are getting back to learning their math, science, and reading. But there is one important subject that schools don't teach kids - money.

Interestingly, the subject of how to handle money is something that many parents (especially many of you at Chevron) put off discussing with their children-often because their parents weren't forthcoming about money, it's not a subject they are necessarily comfortable bringing up with their children.

If you avoid discussing money management with your children, they will likely pick up lessons on how to handle money from the least appealing sources: the media, advertisers or friends-all of whom often make compelling pitches to young minds to overspend.

Molding Behavior
Fortunately, there are a number of ways that Chevron parents can teach their children to be thoughtful, deliberate and generous with the money they earn or are given. A good place to start is with an allowance. The purpose of the allowance is to give your children practice at making decisions on how to handle money. When you first start giving an allowance, it's a good idea to use that occasion to offer guidance about what are acceptable ways to use the funds. This is also a good time to introduce short- and long-term goal setting and teaching them the habit of saving.

We want to teach children to do four things with their allowance: spend, save, invest and donate. One way parents can reinforce these options is by giving their kids four piggy banks, one for each of the choices. The purpose is to help children think about their money options, rather than just rush out and spend as quickly as possible. This can help teach and reinforce the notion of delayed gratification.

A Proper Mindset
As your children get older, it's a good idea to incorporate bigger financial goals into their savings efforts. It not only makes money management more fun, but it encourages kids to carefully consider the consequences of spending money.

For instance, if you want your children to learn that it's important to give back to the community, you may consider taking it even further and encouraging your kids to not only make donations, but also volunteer their time at some of the charities the family supports financially. Many Chevron employees already are charitably inclined; for instance, I noticed that Team Chevron is one of the top fundraisers for a bike ride to help end multiple sclerosis.

Setting a Good Example
While communication is critical when teaching children good spending and saving habits, parents should keep in mind that their own actions are equally important. Accordingly, parents should share their own financial values and goals with their children.

For instance, tell them about your own goals, that you're saving for their college education and your own retirement. Let them know that each week you take money from your paycheck and put it toward a college fund and/or your ESIP/401(k). If they start hearing these terms at a young age, they'll remember them. It's important to keep in mind that if we want our children to be good money managers, we have to model that behavior first.

Postponing discussions about money management doesn't help your children, and can even hurt them in the long run. From an early age, children are constantly exposed to advertising that bombards them with the often persuasive message that the main purpose of having money is to spend it. Countering that siege is a task that should begin early - as soon as they are able to understand these concepts.

With very young children, you're molding behavior. When you reach kids at the middle school or high school level, it's much harder to change their attitudes and behavior, because at those stages kids are more influenced by their peers and societal pressure.

But if you do have older kids who are mature enough to understand more complex financial concepts, you can teach them about your CRP, 401(k) plan, and IRA's. If they are working already, you can also encourage them to open up their own retirement accounts.

We'd be happy to sit down with you for a review of your existing financial planning to ensure you're setting a good example for your children or that your current financial strategy matches up with your goals, especially during the ROM. Because we work with many Chevron executives, managers, employees and retirees, we're very knowledgeable about your various compensation plans and benefit offerings, plus other issues specific to Chevron employees (in addition to the retirement, investment, and estate planning issues everybody faces).

Please contact us at (925) 659-0217 with specific questions or to schedule a time to meet in our San Ramon, Point Richmond or Houston, TX offices. Also, follow us on LinkedIn.

David Chazin, Insight Wealth Strategies and Lincoln Financial Advisors Corp are not affiliated with Chevron.